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THE IMPACT OF ROA AND DAR ON THE BEI F&B

STOCK PRICE DURING COVID-19

Asriani Hasana*, Andi Risfan Rizaldib

a
Universitas Muhammadiyah Makassar, Indonesia
b
Universitas Muhammadiyah Makassar, Indonesia
asriani.hasan@unismuh.ac.id

This study is about the Impact of ROA and DAR on Stock Prices in companies of
Food and beverage companies listed on the Bursa Efek Indonesia (BEI). This study
uses the annual financial report data and average data closing price of shares in
2021. In this study, the amount of data used as a sample is 30 companies. The data
sources used are www.idx.co.id and www.financeyahoo.com. This study uses
multiple linear regression analysis methods to see the influence of ROA and DAR
on stock prices. The results obtained based on the chosen analytical method are
that there is a positive and significant influence on the variable return on assets
(ROA) on stock prices. Furthermore, the variable of DAR on stock price has a
negative and insignificant impact.

Article Info
• Received :
• Revised :
• Published : 28th February, 2023
• Pages :
• DOI :
• JEL :
• Keywords : ROA, DAR, Stock Price

This work is licensed under a Creative Commons Attribution 4.0 International License
1. Introduction
Revious research suggested by (Hasanudin, Taruna, & Fassya, 2022) that ROA and
DAR affect stock prices. The research subject was the transportation company
sector in 2014 – 2019 and applied before the Covid-19 pandemic era. The research
used ROA as a dependent variable and DAR as an independent variable on the stock
price. The research shows that ROA has a significant impact, and DAR has an
insignificant effect on the stock price. The main implication as a background of this
study is to identify the impact of Returning assets (ROA) and Debt Ratio (DAR) on
stock price during the Covid-19 pandemic era. The subject of this study is Food
Beverage Companies listed on Bursa Efek Indonesia in 2021 during the Covid-19
period. This study uses secondary data obtained from website
pages www.idx.co.id and www.financeyahoo.com. This thought is a background
to distinguish this study from previous research.

Bursa Efek Indonesia (BEI), also known as the Stock Exchange, is an appointment
place for buyers and sellers of stock exchanges or securities for trading. Some of
the products offered on the BEI are stocks, bonds, EFT or Exchange Traded Funds,
derivatives, indices, and others. Investors are demanding familiar products such as;
stocks, bonds, and mutual funds. These products are easier to buy and sell quickly
than ever before. As it is today, one of its products is stock, and now investors can
open a stock account online. It is the same for mutual funds and bond products;
investors can buy them online, and capital owners can access all of the financial
records of all companies listed on the stock market. In that way, the capital owners
can make assessments of which company they choose to invest their capital in.

The most crucial information that investors should be aware of before making a
purchase is the company's financial ratios.According to (Kasmir, 2018) financial
ratios are the activity of comparing scores in a financial report with the trick of
dividing one score by another. Financial ratios consist of liquidity, solvency,
movement, and profitability ratios. An important indicator known by the owners of
capital is the stock price. Fluctuations in stock prices can affect a company's
profitability ratios, such as the ROA(Efendi & Ngatno, 2018). This study uses part
of the solvency and profitability ratios, a debt ratio, also known as DAR and ROA,
as independent variables. As the dependent variable, this study uses stock prices.

A Return on Asset Ratio predicts how invested capital can provide a return profit
as expected (Fahmi, 2013). In addition, ROA is also measuring company profits to
compare the profit position of the current period with the previous period . In
general, the formula for ROA is written as follows:

Net Profit After Tax

ROA =
Total Asset

where the formula is the distribution of net profit after tax with total assets. (Hery,
2015) said that ROA predicts how the role of investment brings profit. The
efficiency and influenceiveness of asset management in a company will improve if
the resulting ROA is greater (M.Hanafi, 2010). However, based on research (N. R.
1

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Sari, Nurhasanah, & Hersona, 2022) the ROA ratio partially has a negative and non-
specific influence on stock prices.

The Debt to Asset ratio or debt ratio strongly correlates with a company's financial
health. According to (Kasmir, 2014) the solvency ratio, the Debt to Asset (DAR)
assesses the quality of the quotient between total debt and total assets. The DAR
ratio also shows the influence of company debt on asset financing (Hery, 2015). In
general, the debt ratio formula (DAR) is shown as follows:

Debt Total
DAR =
Total Asset

Some opinions above conclude that the DAR ratio and the risk have a linear
relation. If the DAR in a company increase, the risk of the company becoming
bankrupt would be increase (Basri, Batubara, & Simatupang, 2022).

Stocks are one of the most popular capital market products for investors.
(Hermuningsih, 2012) defines stock as securities traded through the stock market
issued by a company in the form of a limited liability company. Depending on the
level of ownership, the person who purchases shares becomes the owner of the
business. Stocks are also an important part that affects financial ratios. The stock
price is a score set by a company that has gone public, which can influence the
supply and demand when buying and selling stocks. The rise and fall of stock prices
are using fundamental analysis and technical analysis to be seen.

This study intends to demonstrate how ROA and DAR affected stock prices for
food and beverage companies during the period of COVID-19. (Hasanudin et al.,
2022) conducts an observation to show the influence of ROA, DAR, and Current
Ratio on stock prices. Research's objects were using transportation companies listed
on the BEI from 2014 - 2019. The formulation of the problem in this study is
whether ROA affects stock prices and does DAR affect stock prices.

2. Literature Review
Signaling Theory
One of the well-known theories in the capital market is MM Theory. Modigliani
and Miller (1963) is the person who put this theory. This theory mainly implies that
companies can utilize debts as much as possible compared to other alternative
funding such as price (Modigliani & Miller, 1963). The company’s debts indicate
to investors that the company can still survive, compared to companies that increase
the sale of their shares.(Ross, 1977) develops this theory as a signal that claims
asymmetry information between investors and companies and claims how
companies give a sign to financial report users. This theory is closely related to
Return on Asset (ROA), a type of profitability theory, and Debt to Asset Ratio
(DAR), the solvability ratio.

This work is licensed under a Creative Commons Attribution 4.0 International License
Return on Assets (ROA)
Return on Assets (ROA) is a profitability ratio that deviates from the division
between Net Profit After Tax and Total Assets. ROA is part of the profitability ratio
to determine the net parameter profit of the company by using all the assets.
(Brigham & Houston, 2018). In other words, it shows the successes of a company’s
financial performance. According to (Sirait, 2017) ROA is the earning power ratio,
which means the company’s tricks in resulting profit from used assets.
Mathematically, the ROA can be written as follows:

Net Profit After Tax

ROA =
Total Asset
The increase in ROA values aims to increase the company's performance improves.
This condition can improve the company's profit values to attract investors in
investing in stock investment form. This condition can also affect the improvement
of the company's stock price. A company's asset management efficiency and
effectiveness will improve if the resulting ROA improves. (Putri Khairani &
Septianti, 2020) claims that ROA has a significant impact on stock prices also
(Husaini, 2012) claims that way. However, the research from ((P. A. Sari &
Batubara, 2020) shows that the ROA ratio negatively impacts and is not significant
on the stock price.

Debt To Asset Ratio (DAR)

The debt ratio (DAR) is a type of solvability ratio resulting from dividing debt total
by assets total. DAR measures how much a company is funded by debts and its
strength to fulfil its obligations through its assets. (Andhani, 2019),The company's
bankruptcy risk is greater if the total owned DAR is greater. Because the debt ratio
(DAR) is a robust correlation with a company's healthy finances, mathematically,
the DAR formula can be written as follows:

Debt Total
DAR =
Total Asset

The research (Widjiarti, 2019) shows that Debt to Asset Ratio impacts the stock
price. However, this condition differs from previous research (Salden, 2021) that
claims DAR has no significance on the stock price.

Stock Price
Stocks are a type of financial investment that investors are interested in and traded
on the financial market, Bursa Efek Indonesia (BEI). Stock prices are an essential
indicator that investors need to consider because the ups and downs of stock prices
can affect the level of investor profits and the company’s good name (Suryawan &
Wirajaya, 2017). (Imran, Shahzad, Chani, Hassan, & Mustafa, 2014) said that the
stock price is a parameter to provide full power to the company because if the
company’s stock price continues to be better, it can indicate that the company and
its management have worked well. The value of a company’s stock price can be
maximized using the company’s operational efficiency. People can access updated
information about stock prices through the linked

This work is licensed under a Creative Commons Attribution 4.0 International License
websites www.idx.co.id and www.financeyahoo.com. At this time, the transaction
of share purchase becomes easier. The condition is shown in the products offered
by banks; for example, Bank Mandiri has Mandiri Securities for buying and selling
shares, Bank BRI has the BRIGHTS application as an application used to conduct
money market transactions and several other types of applicants.

3. Research Methods
This study uses quantitative research category with multiple linear regression
analysis methods to determine how ROA and DAR impact stock prices of food and
beverage companies listed on the BEI during the Covid-19 pandemic. This study
uses secondary data to obtain financial reports audited in 2012 accessed
from www.idx.id. People can access stock data for food and beverage companies
on www.yahoofinance.com, which aims to obtain closing stock prices using
monthly frequency from 1st January until 31st December 2021. This study's total
data used as a sample is thirty companies from 36 companies listed on BEI until
2021 because six companies need to fulfil the criteria in sampling—for example,
PT.Agri Resources Tbk is no longer registered on Bursa Efek Indonesi (BEI), while
sedangkan PT. Aman Agrindo Tbk, PT. Formosa Ingridient Factory Tbk., PT. Indo
Boga Sukses Tbk., and PT. Toba Surimi Industries Tbk., is a newcomer to BEI in
2021, so the financial report on BEI is not yet available/released.
This research was conducted in several stages:
1. Variabel Identification
Variable identification determines the dependent and independent variables based
on the data used in the research. The dependent variable is ROA and DAR, while
the independent variable is the stock price.
2. Data Analysis
The data analysis stages carried out were:
a. Classical Asumption Test
This test is integral to using the multiple linear regression analysis methods.
Multicollinearity, heteroscedasticity, linearity, and normalcy tests are all part
of this test.This test is also called the prerequisite test.
b. Hypothesis Test
Hypothesis testing is part of inferential statistics used for decision-making
based on the results of data analysis. If all the classical assumption tests meet,
then the next step is to carry out a significance test (T-test) to determine
whether the proposed hypothesis is rejected or accepted. It aims to see the
significant influence of the ROA and DAR variables on stock prices and a
simultaneous test (F test) to see whether the impact of the ROA variable and
DAR have a significant influence on stock prices. The multiple linear
regression equation models are:

Y = b0 + b1 X1 + b2 X2 + ε
Note:
Y = Stock Price
X1 = ROA
X2 = DAR
4

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 b0 = Intercept (Constant)
b1 = ROA Coeffisient Regression
b2 = DAR Coeffisient Regression
ε = error rate

4. Results
Descriptive Statistic
Table 1 displays the number of samples, minimum,maximum, mean, and standard
deviation values of the variables utilized in this study as the result of a descriptive
statistical test. These variables consist of stock price, ROA and DAR variables. The
amount of each - each data used is 30 data. This table also shows the following:
a. The stock price has a range of 4.35 to 8.24 and a mean value of 6.53 with a
standard deviation of 1.051. It also has a maximum value of 8.24 and a minimum
value of 4.35.
b. With a mean value of 0.1 and a standard deviation of 0.0836, ROA achieves a
lowest value of -0.1 and a maximum value of 0.2.
c. Debt to Asset (DAR) has a range of 0.1 to 2.40 with a mean value of 0.54 with
a standard deviation of 0.452. It also has a minimum value of 0.1 and a highest
value of 2.40.
Table 1. Descriptive Statistics
Number of Minimum Maxsimum Mean Standard
Variable
Sampels (N) Value Value Value Deviation
Stock Price 30 4,35 8,24 6,53 1,051
ROA 30 -0,1 0,2 0,1 0,0836
DAR 30 0,1 2,40 0,54 0,452
Source : Processed Data 2022

Perason Correlation Test

Table 2 below is the result of the Pearson correlation test, which shows the
closeness between the variables of stock price and ROA and stock price and DAR.
The results of the Pearson correlation test on stock prices on ROA are 0.707 with a
significance of 0.00. That means that the ROA stock price has a strong correlation.
While the correlation between stock prices and DAR is -0.319 with a value of 0.043.
That means that stock prices with DAR have a weak correlation.

Table 2 Pearson Correlation Test

Stock Price ROA DAR
Pearson Correllation Test
Stock Price 1 0,707 -0,319
Sig (1-tailed) Stock Price - 0,00 0,043
Sourced : Processed Data 2022

Classical Asumption and Hypothesis Test

Autocorrelation and Coefficient Determination Test
Table 3 is an autocorrelation test from the results of the Durbin Watson and
Adjusted R Square tests to see the results of the determination coefficient test. The
Adjusted R Squared value shown in table 3 is 0.515 or 51.5%, where the regression
model in this study is relatively good or strong. That indicates that a model may
5

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account for 51.5% of the role ROA and DAR play in affecting stock price, with the
remaining portion coming from the influence of other factors not covered in this
study. Then, the Durbin-Watson test shown in table 3 is equal to 1.896; in other
words, the variables in this study do not experience autocorrelation disorders
because these values are between dU (1.5666) and 4 – dU (2.4334).

Table 3. Autocorrelation Test & Cofficient Deteremination Test

Durbin
R Square Adjusted R Std. Error of
Model R Watson
Value Square The Estimate
Value
1 0,741 0,550 0,515 0,79689 1,896
Source: Processed data 2022

Normality Test
The purpose of carrying out the normality test is to show that the variables used in
this study meet a normal distribution. The normality test results in this study used
the Kolmogorov - Smirnov Test with a significant value of 0.20 > 0.005, meaning
that the variables used met a normal distribution. Table 4 below shows these results.
P – P Plot graph in Figure 2 can also show the Normality Test can also.
Table 4. Normality Test
Data (N) Asymp. Sig (2-Tailed)
30 0,200
Sourced : Processed Data 2022

Sourced : Processed Data 2022

Figure 2. P – P Plot Normality Test

Homoscedasticity Test
6

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This study must meet the homoscedasticity test as one of the definitive assumption
tests. The results of the homoscedasticity test using the Glejser test contained in
table 5 fulfil or, in other words, the residual variance values in this study are the
same, meaning that there are no symptoms of heteroscedasticity. The graph of
Figure 3 can also show the homoscedasticity test, namely the scatter plot graph.
Table 5. Homoscedasticity Test
Unstardasdized
Standardized Significant
Model Coeffisient t
Coefficients Beta Value
B Std Error
Constant 0,773 0,192 4,028 0,00
ROA 1,253 1,241 0,192 1,010 0,322
DAR -0,129 0,230 -0,107 -0,562 0,579
Sourced : Processed Data 2022

Sourced : Processed Data 2022

Figure 3. Scatter Plot Homoscedasticity Test

Multicollinearity Test
The multicollinearity test in this study can be shown in table 6 by looking at the
tolerance and VIF values. If the tolerance value is > 0.10 and VIF < 10, we can
conclude that the independent variables, namely ROA and DAR, in this study are
free from symptoms of multicollinearity with a tolerance value of 0.969 > 0.10 and
VIF 1.032 < 10.
Table 6. Coliniearity Test
Coliniearity Statistics
Model
Tolerance VIF
ROA 0,969 1,032
DAR 0,969 1,032
Sourced : Processed Data 2022

Linearity Test
The linearity test is one of the classical assumption tests that must meet to obtain
the best linear regression model. The stock price and ROA variables have a value
of F = 0.458 with sig = 0.637. The stock price pair and DAR variables have a value
7

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of F = 0.534 with sig = 0.817. The two variables show P > 0.05 (0.637 > 0.05) and
0.817 > 0.05. The meaning of the relationship between the two pairs of variables is
declared linear. Table 7 and 8 below show the results of the linearity tes:
Table 7. Linearity Test of Stock Price*ROA
Sum of Mean
Df F Sig
Square Square
Deviation from
Stock Price*ROA 1,012 2 0,506 0,458 0,637
Linierity
Source: Processed data 2022
Table 8. Linearity Test of Stock Price*DAR
Sum of Mean
Df F Sig
Square Square
Deviation from
Stock Price*DAR 9,409 8 1,176 0,534 0,817
Linierity
Source: Processed data 2022

Multiple Linear Regression Analysis Model

The multiple linear regression analysis models have at least one dependent variable
and two dependent variables. The dependent variable of this research is the stock
price, and the independent variables are ROA and DAR. Table 9 below shows the
regression model:
Table 9. Analysis Regression Model
Unstandardized
Standardized
Model Coefficients t Sig
Coefficients Beta
B Std.Error
Constant 2,690 0,202 13,345 0,000
ROA 8,538 1,780 0,651 4,798 0,000
DAR -0,726 0,425 -0,232 -1,709 0,099
Sourced: Processed Data 2022

The regression equation model is:

Y = 2,690 + 8,538X1 − 0,726X2 + ε

The b1 value of 8.538 indicates that each increase in value of 1 in ROA will increase
the share price by 8.538, and the b2 value of -0.726 indicates that each increase in
value of 1 in DAR will decrease the share price by -0.726 in the share price.

Test-T
Table 9 of the linear regression analysis model also includes the test-t result, which
is used to assess the degree to which each independent variable has an overall or
partial impact on the dependent variable. Suppose the sig value < 0,05 means that
there is an influence of the independent variable on the dependent variable.
However, if the sig value > 0,05, the independent variable has no significant
influence on the dependent variable. The substantial value in the ROA variable on
8

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stock prices is 0,00 < 0,05. It means that there is a significant positive influence
on ROA while the ROA variable on stock prices is 0,099 > 0,05, meaning that the
DAR variable has no significant or negative impact on stock prices.

Test-F
The test-F shows the significant influence of the independent variables jointly or
simultaneously on stock prices. Table 10 below shows the results of the test-F
analysis.
Table 10. Test-F
Sum of Degree of Mean F
Model Significant
Squre Freedom Square value
Regression 20,157 2 10,078 15,871 0,00
Residual 16,511 26 0,635
Total 36,668 28
Source : Processed Data 2022

Based on the analysis’s results in table 10, an F count value of 15.871 with an F
(0.95;30;2) of 3.32. The value of F count > F_table with a significance level of 0.00
means a significant influence between ROA and DAR or simultaneously on stock
prices.

The Impact of Return on Asset (ROA) on Stock Prices

This study's results indicate a positive and significant influence between ROA and
stock prices. Table 7 shows the ROA regression coefficient value of 8.538 with a
significance of 0.00. The results of this study support H1; there is a positive and
significant influence of the ROA variable on stock prices, so the H1 hypothesis is
accepted. This study contradicts (Safitri, Fasa, & Suharto, 2021), which claims that
ROA has little bearing on stock prices. This study supports(Suryawan & Wirajaya,
2017), which found that ROA has a favorable and significant impact on stock
prices. The study’s results can illustrate that if a company's ROA increases, then
this also increases the company's stock price. It is because the increasing ROA's
value signals the success of the company's management in managing its assets.

The Impact of Debt To Asset (DAR) on Stock Prices

This study's results indicate a negative and insignificant influence between the DAR
variable and stock prices. It means a rejection of the H2 hypothesis. Table 7 shows
the value of the regression coefficient DAR -0.726 with a significance of 0.099.
This research is in line with (Nufzatutsaniah & Saepurohman, 2022) that partially
the DAR variable has no significant influence on stock prices. The results of this
study are also in line with (P. A. Sari & Batubara, 2020), which states that the Debt
to Asset Ratio (DAR) does not affect stock prices. Company assets whose funds
come from company liabilities cause high risk but do not always affect stock prices.
However, this can cause the value of the Debt to Asset Ratio (DAR) to increase
(Nufzatutsaniah & Saepurohman, 2022).

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 The Impact of Return on Assets (ROA) and Debt to Assets (DAR) on Stock
Prices (Stock Price)
The test-F in this study shows a significant influence of ROA and DAR
simultaneously or together on stock prices. This can be seen in table 10 where F
count is 15.871 with F(0.95;30;2) of 3.32. F count > F_table with a significance
level of 0.00.

5. Conclusion and Suggestion

Based on The Statistical Test, there is an impact of ROA, and there is no impact of
DAR on Stock Prices in Food Beverage Companies listed on the IDX during Covid
19. This study also shows the impact of ROA and DAR on stock prices
simultaneously or at once. Although the DAR does not always affect stock prices,
this ratio is crucial. This ratio (DAR) is crucial in controlling the debt limit for
companies to finance their assets. In addition, the ROA and DAR are essential for
an investor to decide on an investment. The following study expected to use a
variable affecting the stock price and use the "new normal" era period (post-Covid-
19 pandemic) to obtain the best regression model. In the next step, the research can
remove the variable of DAR and replace it with other variables for powering the
research.

6. Acknowledgement
The writer would like to express her deepest gratitude to Allah SWT for blessing,
love, opportunity, and health to complete this research. The writer is also expressing
her deepest grateful to Dr. Amika Wardana as Research Advisor, the Dikit-Litbang
Council of PP Muhammadiyah, and Muhammadiyah University for providing the
Researh Funds to complete this research. For last but not least, thank to Fitriani
Indah Sari as Translator, and Nurwahidah, S.Pd,. M.sc. as Data Analyst in this
research activity.

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